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tv   Bloomberg Markets European Open  Bloomberg  January 2, 2018 2:30am-4:00am EST

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>> welcome to bloomberg markets, the european open. i'm guy johnson at our new london headquarters. cash equity trade less than 30 minutes away. ♪ guy: china starting the year with a bang. manufacturing pai -- pmi surging. the yuan and stocks strengthening. i'll show you the numbers. will europe follow suit? iran unrest, the death toll -- withas clashes
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clashes. president trump calls for change. bitcoin, the cryptocurrency starts 2018 with a slide for the first time since 2015. has it peaked in the short-term? let's talk about the first trading session of the year. the real story thus far is what is happening in china. a heads up of the story in europe and the united states. we will see a strong start stateside. it was a weak close to 2017, we will be up .4% on the data. .2% on the s&p the ftse 100 could be a laggard, but not by much. asia iscy coming out of a relatively strong one. the picture out of china looking good. the data are coming through at the get go of the year looking favorable. we can talk about that and then
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we have the performance of the eight shares doing well in hong kong. on the gmm, we get a picture around what is going on. the dollar is the week bank theme running through these ofkets as it was on the back 2017. the week eight shares up by 1.8 already. singapore trading strongly, malaysia isn't. will be interesting to see how europe opens. commodities front-end center. the dollar theme is there. we will talk about what will happen with commodities going forward. shanghai copper is trading a little softer this morning, but keep an eye on the oil story. it will be interesting to see how that trades around. the iran thing, whether the market take and run with that. elliptical volatility something to pay attention to in 2018. let's get the first word news update with juliette saly.
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juliette: in iran, the death toll has continued across the past five days. accounts vary, but at least 20 may have died in the demonstrations. that as security forces clash with protesters rallying with the islamic state republic's leader. has preserved the right to protest. mike pence will visit israel and egypt despite speculation he had delayed it again. the confirmation came after an israeli foreign minister spokesman said the visit isn't included in the level of high level dignities, fueling speculation pence had postponed for a second time. he had planned to meet with israel's prime minister and egypt's president in december, but the meeting was postponed until this month. denmark's prime minister wants to conclude the governments planned tax reform this year.
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targetingit cut -- cuts for those with low wages. he said the tax cuts will make it more feasible to work, which will bring more people to the job markets and help ease his country's labor shortage. australia's prime minister has revived the debate about whether the country could become a republic after queen elizabeth dies. malcolm turnbull hinted at a survey, saying there needs to be an honest, open discussion about the issue. it would require a referendum to make changes to the constitution. we will be joined by former prime minister kevin rudd. -- the biggest house prices and u.k. last year, outstripping gains in london's .otspots in southwest england, a 13% jump in prices in 2017, almost five times the national increased. brighton on england's south
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coast saw the next highest, with rises more than 11%. global news 24 hours a day, powered by more than 2700 journalists and analysts in more , this iscountries bloomberg. guy: thanks very much. happy new year. toopean stocks look set bypass the traditional new your hangover. the msci asia-pacific moving to record highs and looks to carry into european trading. up that much. he wrote trading north of 120. what kind of predictions can we make for the year forward and how useful is january as a lead indicator for the rest of the year? cudmore, mliv strategist is in london. a rare pleasure -- pleasure. are old friends. let's dig into what is happening. mark, i will start with you and then we will have fun with this. your conviction trade for 2018 is what? mark: to remain bullish equities
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overall. you would have to focus on major market currencies and asia. asian equities are the best place in 2018. guy: what about europe? mark: the europe story is still very positive. i am concerned to how the trading is long at the moment and i think the story is very talked about. everyone is saying the u.s. has done a lot of their hiking and are well through the cycle and europe will start taping -- tapering. i'm not convinced. the euro will be slightly volatile. i wouldn't be particularly bullish here. i don't think it is that exciting this year. people are getting on too late. guy: let's take some of that and have a little fun with it. is consensus trade is asia going to do well, emerging market currencies will do well. are you on board with that? they have come out of the gate strongly.
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is that a reason to sell them, said run away from january? a historical basis, what you tend to find is at the beginning of the year, the currencies that do best turned a first month of the year tend to sell off during the rest of the quarter. that is a historical basis. one thing to bear in mind is the positioning, as well. exciting, the most trades tend to be the one that lose gravity toward the end. guy: so the emerging markets story, do you worry? a lot about that that makes sense. you have the retail money after christmas and people invest in the stock market and get excited for a few weeks. the third week of the year, you see the consensus trade unwind. last year, everyone was so bullish the dollar and the
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january or something. i can see that this year. this year, the market is starting off with dollar weakness and there has been a bit of a buy the rumor, sell the fat tax cut. you have u.s. equity and dollar a little softer the next few weeks -- >> that is the trade the market is not set up for. a strong dollar in 2018 would put a lot of people on the wrong side. saeed: you need to fed to be hiking a lot more than people are expecting and one rationale for that would be higher inflation, driven by crude or other factors. at this stage, possibly i find iting, difficult to see the dollar strengthening significantly this year. guy: let's talk about the energy trade and inflation trade. the things that were absent last year were inflation and volatility. if you get one, you will definitely see the other. for taylor and
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his stories, tail risk stories this year, is it energy could go higher? be one of those things, driven by middle east unrest we have seen in iran or other places to a small extent. it is difficult to see that, but something you would want to see as a gray swan's attention. ,exford you see the euro going more broadly? saeed: possibly agreeing with mark. guy: don't do that. saeed: you would see the euro higher from here. you have deflation of political risk in there, so you have some event risk in terms of the italian election, but i don't see it being a big deal. mark: i think the italian election will be a nonevent. that is last year's story. forget about european politics. it is going to cause a pullback and people will get scared and hype it up.
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political been analysts who have been hired because of last year and have to prove their worth. year, it time last would have been, french elections are coming up, dutch elections are coming up, the populist backlash is coming up. it didn't, and we are starting this year with, why worry? mark: i think we will get worried again, but they are wrong to do it. they will realize it is hard to be a coalition that genuinely threatens the existence of the euro and that is what it is about. for ahas been a laggard long time, that is not going to blow up europe. people will not sell europe unless there is existential risk and that will not come through. guy: i will mark feel better about himself, because he needs it. -- have been doing some work looking at the impact journalism has or reporting has in terms of financial trends. what are you getting? saeed: basically, the data
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produced by bloomberg news by journalists here. weically looking at, can extract sentiment from the markets, looking at the machinery. you tend to find you have short-term momentum in the sentiment generated by journalists in the news on the currencies. thehave bullish consent for dollar and fx, as well. it is an interesting viewpoint, but something people will look at in the future. i think looking at news from a systematic perspective. mark: the number of headlines or how powerful? saeed: the sentiment of the whole article. he need to have enough articles there to gauge a sentiment, but you do have a followthrough affect. it is not correlated to trend in foreign markets. guy: one final question. i can ask you this question.
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bitcoin, 2018? he's laughing. should we be laughing? is it over, is the 2017 back end story done now? give us your twopence worth or two bitcoins worth. saeed: the thing is, the involvement in the market is small. see a small pickup in terms of more institutional speculators, probably the better word. you will see a more bit of an uptick in bitcoin, but i would look at other currencies. for example, ripple is an interesting one. it actually has a company behind it and it is specific to the use of payment processing. guy: -- mark: a real business plan behind cryptocurrency is interesting. guy: might work. thank you for coming to see us this morning. mark cudmore, mliv macro strategist joining us on set and
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thanks saeed amen, founder of cuemacro joining us on set. first day of the trading year. what do we have coming up? iran protesters digging in, as trump says, the country is failing at every level. we bring to the latest on the unrest. that is next. this is bloomberg. ♪
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guy: 14 minutes till the start of european cash trading for equities. here is a bloomberg business flash with juliette saly. compass group ceo richard cousins and four members of his family were killed on sunday when their chartered sightseeing flight crashed north of sydney. the sea plane crashed into the river near jerusalem bay, killing all six on board including the pilot. atsins was due to step down the beginning of march. the former chief operating officer for europe will succeed him with immediate effect. executiver associates steinberg and his family were among 12 who died in a light plane crash in costa rica. steinberg, his wife and three sons died when their plane crashed shortly after takeoff. four members of a family from florida, another american and two local crew members died. as aberg was described
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wonderful man. north korean hackers are hijacking computers to mine cryptocurrencies as the regime in pyongyang widens its hunt for cash under tougher sanctions. that is according to the south korean government backed financial security institute. was used to mine worth $25,000. south korea's biggest carmaker has lost demand in the world's major markets. high-end i and kia set targets at 7.75 vehicles after setting a in 2017.al the company said stalling global economic growth, rising protectionism and dangers caused by geopolitics are threatening performance in the world's major markets. that is your bloomberg business flash. guy: taylor: -- guy: the death toll in iran has
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climbed after security forces clash with protesters. at least 20 have died in unrest after more violence overnight. president rouhani is trying to diffuse the situation by defending the iranian people's right to demonstrate peacefully. dubai.joined from what is the latest? >> the latest is right now, clashes overnight. the situation right now is relatively calm. saying a senior official the protests will die down in a few days. this was before comments from the secretary-general of iran's supreme security council. perhaps predictably, blamed the u.s., britain and saudi arabia for seeming to take advantage of the unrest. a large shows
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percentage of #'s the protests were created by saudi arabia. withhow does this compare 2009? the last period where we saw big protests? alaa: the consensus right now is smaller thanch 2009. it is not related to the green movement and analysts don't expect it to snowball to that level. one analyst earlier today said there seems to be a lack of organization or leadership. obviously didn't prevent protests and revolts in other parts of the middle east from snowballing and ending up toppling regimes. far it does not compare to 2009, which had a clear theme. basically, protecting election results in 2009. right now, it is between protests about prices against
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institutions, paired with political slogans. to be at this stage, this has a genesis in the economy. the lack of economic performance, yet the data out of the economy has been improving as of late. inflation has come down sharply. what does what we are seeing at the moment mean for the economy and iranian businesses? the numbers are improving. inflation has come down, we have isn it up to 40% and now it 10%. obviously, prices are rising at a slower level. the improvement is not as fast as people expected. much of that because of the lack of an foreign investors, european investors aren't rushing to iran. the rhetoric out of the trump administration isn't helping in terms of threatening to rip up the nuclear deal. we have also seen domestically, an urgentad
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recapitalization for institutions. you can see one of the reasons why the economy hasn't picked up as fast as people expected after the nuclear deal is the long growth isn't picking up fast because of the situation with the banks as we can tell. how would this affect the outlook? it certainly doesn't help. aren't goingtors to look at this and think it is good time to invest in iran. guy: we leave it there. thank you, alaa shahine. we are eight minutes from the start of european cash trading. next, a look at the stocks we should be watching this morning. bp and glencore, two in focus. and core sold its australian coal mine. talk about what that means that the get go. eight minutes and 20 seconds away to that european trade. this is bloomberg. ♪
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♪ to the startutes of european trade. the first trading day of the new year. stocks we are focusing on, glencore offloading coal assets in australia. bp another stock to pay attention to this morning, outlining the positive impact we may see from the u.s. tax changes. we have seen a series of big oil
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companies coming through, giving an idea. has their arms around the story, but they are updating investors on what will be happening. miners and oil stocks will be an interesting story at the start of the year. commodities seem to have started later. what else are we watching? vesta could have a positive start. it looks like order flow could be a positive story this morning. keep an eye on reckitt at the get go. pay attention to that. generally, it looks like europe will come out of the gate stronger. screen is telling me the ftse will open up around .2%. london looks to be something of an underperformer at the start of the first trading day of the year. it was a big underperformer last year. it is called slightly more negatively. to cac and dax looke open positive lee.
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i think switzerland is closed today. the market open is coming up next. this is bloomberg. ♪
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♪ guy: welcome back, first trading day of the year about to start. look at london. startek you down to the are keen trading. let's talk about where the markets are right now. positive we will see a start in europe. there is the cable rate rising. we look for manufacturing data out of europe, including london. the asian markets have been strong with some exceptions. hong kong leading the charge, closing up near -- nearly 2%. oil up .4%. keep an eye in europe. at the moment, looks like the fair values point to a
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positive start in the states. let's show you what the fair values look like on the bloomberg. london looks like it will be an underperformer, opening flat. the rest of europe, point 2% higher. looks like the dow and s&p will open reasonably stronger. let's show you the monitors. -- 76.87 out 17.87 of the gate. looking flat. compared to its peers, it is. -- 7687 out of the gate. the cac opening by .1% up. the dac, similar. ibex is starting nicely, up .4%. certainly seeing outperformance there. where are we getting trade in the sector story? theas a rotation around
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sectors last year that really delivered the outperformance. health care is weaker this morning. we will talk about health care later with sam's is ellie to give us a heads -- with sam to give us a heads up. therapy, oncology, big things coming in. trading higher. the financial stories look well bid. industrials mixed up, cable trading a little softer. keep an eye on reckitt. copper has been a bit more mixed. the oil traded strongly, copper more mixed. materials trading a little softer this morning, but health care looks like the main drag. you have to remember switzerland is not trading. financials are well bid. energy looks reasonably well bid. let's talk about what is happening with these markets and get you more detail. ftse 100 down by .1%, cac trading up by .1%, ibex trading up by .3%.
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that is the picture we find ourselves with at the moment. theerms of the movers and individual stocks stories, we will keep an eye on some of these energy stocks and what is happening. let's run you through some numbers. trading avestas little stronger. some energy names in there, as well. some in the commodities space, trading strongly. wic look at the losers, where is the downside action? ladbrokes trading down, poly metal in the metal space, aib n down.ies, real the miners are off. they had a good run into the end of the year, but it looks like the and restore he is more positive for the european markets. energy story is more positive
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for the european markets. political risk will be a factor in 2018. we still don't have a german government, theoretically. angela merkel has used her new year's eve speech to outline a vision for her fourth term. uncle said she would work with emmanuel macron to strengthen europe's migration while upholding the values of tolerance and pluralism. right parties far since the 19 50's, merkel has acknowledgment a growing divide between winners and losers in germany's economic boom. >> i know from numerous discussions and meetings this year that many of you are concerned about solidarity in germany. many have not been so different opinions about this for a long time. some are even talking about a -- that goes through our society. us, the managing director at analysis joining us from credit suisse.
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the consensus seems to be a good year for europe. euro willation is the go higher and european stocks have a solid performance. that sling -- seems slightly contradictory to me. >> it is a consensus view and credit suisse could do very well this year from our outlook for european equities, and that issue about strong euro has been what has put markets under weeks.e the last two the stronger euro is stronger in its own right. byo-dollar has been driven the weaker dollar, and that is a clear factor going on. we have seen european equities kunda -- come under pressure from that. to call upet right european equities. it will be an opportunity, but probably will get a better opportunity from the fact that we are under pressure with the strong euro at the moment. guy: it depends on where you are coming from.
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if you are a u.s. investor, you were antor, insatiable perfect -- the euro was an insatiable performer last year. david: that was very much the theme, and then we came into that huge used -- boost at the end of summer. if you look at the data in europe, it had a bullish position first half of the year and that has collapsed. even though it was a strong performer on that side, it is still very flat. i think that gives us upside once we get this phase of euro strength out of the way. guy: what could confound that? it does strike me that you have a very heady combination of easy central bank money, and economy playing catch-up in terms of its relative position to the rest of the world -- the politics story is fading, a very heady
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combination. what could upset the apple cart? david: it remains bond markets and interest rates. the speed of interest rate hikes. in thing we are seeing interest rate markets globally is this huge move higher in yields in the u.s. on the front-end and the flattening of the curve. we are starting to see signs of that in europe. yields were starting to move out of the range they have been and rising. the 10 year remains flat. what would hurt european equities, if we saw long and yields start to break down because the impact would be extremely higher and that is not what the market is anticipating or is set up for. we will get manufacturing pmi through the morning and the numbers -- you take your choice on if you believe survey data and it returns real or not. it will be harder
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to move these numbers higher than here. to keepwe need to see the story -- >> i think that is right. you can reverse that question and say given how strong the data has been, why we seeing equities material higher -- materially higher than we have been? what is holding europe back is the euro story and the u.s. strength. what we need to see in europe is the euro dollar rally continue. get tollar can still 122. that is where the euro-dollar story ends and if the euro does turnaround from there, that has been a big hindrance on european equities and let's that story start to recover. guy: there is a sense we will see the ecb backing off its super stimulus it has delivered the last few years. i guess the argument i would put counter to that is, draghi has
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one job and that is inflation. -- the seems to be inflation impetus is beginning to fade, not accelerate. david: i don't think there has been a particularly cheney -- particular change in the inflation story. there has been no material acceleration or deceleration. guy: economist projections are suggesting harder for europe to make inflation gains this year. mixd: technically, and i technicals and fundamentals, the help on astory is global basis using u.s. breakevens, u.k. breakevens, making headway on the commodities story is a real driver of that. i am not so worry about the european breakeven story. that could continue in line with the other stories. whether that changes draghi's decision-making is something
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else altogether. at the moment, it is sound. what is not having an impact is bund yields. we tried it the week before christmas and we failed again. we are stuck in these ranges and that will be key for me in the first quarter when those bund yields break out of the range. guy: we will go into those details in a few minutes. you see u.s. breakevens at 2%, north of there. 1.4, 1.5,ou look at where will the fed take its cues? , head of technical analysis at credit suisse, will stick around. tv .atch using if you want all the added bells and whistles, tv on your bloomberg. streamu get is the video and this sidebar which adds the functionality in there. get breaking news, guest bios
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and charts. let us know what this year is going to be looking like. let us know what you think. china starting the year with a bang. pmi surges and the pboc delivers. the latest from hong kong next. this is bloomberg. ♪
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guy: welcome back. this is the first trading day of 2018. we are 12 minutes into it. to be honest, we came out of the gate flat and since then, faded the rally. most of europe is now softer. you have some exceptions. the iberian peninsula looking strong, spanish equities well bid. elsewhere around the continent, you are seeing weakness. switzerland is closed and we have the tokyo markets closed for the rest of the week up until thursday. what we are seeing this morning's health care fading. you have material stocks on the back foot. germany is beginning to get more momentum on the downside. we are talking about the consensus strayed -- trade and europe being out performer. they won, not may be the best indicator -- day one, not the best indicator. europe is just a one-way bet. a similar story, china has its
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2018 with robust momentum. manufacturing pmi surging to 1.5 -- 51 .5, versus 50.8. developers led local stocks higher. on reports that a property tax may be delayed until 2020. we have also had this temporary cut coming into the holiday season in china and there is often a liquidity squeeze when it looks like the -- that it looks like the central bank is trying to deal with. we are joined now for what is happening. what is behind some of this optimism? like a cocktail of factors. the pboc one of those in the mix. absolutely. it is clear china ended the year in something of a sweet spot. ,rom the pmi indicators
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manufacturing is holding up quite well. sentiment is holding up well among business executives and the consumer. exports are doing well on the back of global recovery and the real estate sector, which was showing signs of frothy mess last year, has cooled without tipping into wider slowdown. the background for the chinese economy into the new year is pretty good. the big risks remain, how will the policymakers manage the position to clean up the environment and get a hold of the debt situation without hurting the wider economy. that is what the world is watching in the year ahead. guy: we are looking for any and whato the economy business is looking like. what do we get from the survey? enda: it is an interesting survey from the pboc. it looked at around 5000 businesses in the country and the message was that the v-shaped recovery in 2016 after the markets dropped in china,
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that recovery still continues, and it shows -- speaks to the confidence is still robust despite wider challenges in the economy and the government is promising to tackle debt and that might mean less funds for infrastructure product -- projects. that it is hard to get a true handle on their economy at the beginning of the year because we are heading into the lunar new year holiday in february. it could be a while before it clearer picture emerges of where it is heading. guy: thank you, enda curran joining us from hong kong. we are starting to kick off some of the data and will work our way through the morning. we are getting spanish manufacturing pmi, softening up, 55.8.
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there was an expectation the number would go higher. that has not come through. as i keep saying, the consensus trade is europe will do well. david sneddon joins us on set. david, we talked about iran with mark cudmore. a lot of people are talking about asia continuing to do well this year. if you are looking to lift the numbers in your portfolio, it could be a place to look. the china data may be at this point not the best indicators, if china has a good year this year, what does the rest of asia look like in its wake? david: i think construction. the emerging market story has been good for the last few years. how could you still be bullish at this point in time, but i don't see anything there to derail it and i think stick with it is the thing. more so asia than other areas of emerging markets. i think china is still good, we
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have had a 3600 percent target of the shanghai comp and we don't see a reason to change it. the setback we saw last year has been well supported. you have the weakening dollar against asian currencies, especially in the emerging market, is supportive as well. seen dollar weakness not come through with dollar mexico, but you see dollar korea, dollar taiwan, other currencies strengthening is a big help for the asian side and the general recovery from the koppers and oil, which is -- toper and oils fit together tell a bullish story and stick with it. guy: the commodities certainly finished last year with decent momentum, if china stays the course at this time, how much -- where do i get the maximum outperformance from my asia trade?
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david: good question. the korea story is very tight. -- tied to the tech story and index,nk of it as an where is the real bang for the buck? if the dollar is weakening, that supports the tech story. taiwan and korea are there. the energy side, malaysia recovering within the asian space. china is the general story when you look at the enterprise index, the shang -- shanghai comp. the negative view on china, you have not got that whereas one china -- china is one of the strong stories. i think that will continue to help it. guy: great stuff, david sneddon, atd of technical analysis
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credit suisse stays with us. we will dig into what we will be looking at with the greenback in 2018. president trump sees a "fantastic 2018" ahead for u.s. stocks, continuing to climb. he sees it as one of his major metrics, but midterms are coming up. how long can the bull run continue in u.s. stocks and what does the position look like in the bond market? that is next. this is bloomberg. ♪
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♪ guy: we are 22 minutes into the market session. exactlylk about what 2018 is going to deliver stateside. president trump has predicted to what -- predicted a fantastic 2018, speaking to reporters in mar-a-lago. he got the stock market would continue to rise and more companies would move to the u.s. in the years to come. with us still, david sneddon at credit suisse. a dollar investor last year, you made 20% in the u.s. if you were a euro investor, you made 3% or 4%. let's talk about valuations and the different perspectives on valuations. the u.s.d argue markets look stretched from a
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valuation point of view. to widengap is going out versus where europe is this year. would you agree with that as a starting premise? it is i think flipping going back to the original statement. the year -- original statement is euro to outperform because it has underperformed. ast needs to do the catch up much as the u.s. is overstretched. you get a divergent view on u.s. on the wii -- with economists because there is the view it is late in the cycle and overstretched, but there is more upside to go in the u.s.. guy: you have other factors in this mix, infrastructure as well? david: you do, but the undermine -- underlying technicals are strong. it is clearly a trend that has been overextended, but the old adage is the trend is your friend. we have to stick with that. with theworry about
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u.s. is if you see credit turn and a material change in that story and start to see material weakening of the tech sector, neither which have happened yet. the credit is more interesting, tights we are seeing. i still think the risk is credit, even though you are overstretched in credit over equities, that is what we need to watch more closely at the moment rather than -- >> quality seems to be going down, at some point, that can't work going forward. that 2019 story. guy: let's talk about the vix, it continues to be low. 10.96 on the vix. does that number go higher or go lower in 2018? at thei think we look trend for 2017. we stay with the equity story
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itself. we stay at these levels. see a little more volatility. has to rise at some point, but making the turn on equity markets is still a difficult call to make. we need a lot more evidence to make a more meaningful turn there and just because it is low doesn't mean it should start to rise. this is a little wedge forming up. which way do we break on this one, because i'm interested to get your take. consensus is weaker. david: technically, we think weaker and reviewed the recovery in 2017 as a correction in a downward move dominating from the beginning of the year. if you look at the chart, it doesn't show the trend. on a daily basis, you stopped the downward trend we have been in all year and if the dollar is turning down from there. the risk is, our viewers would
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go to last year. at the bigger picture, the dollar is in this great big sideways trend and even though we did break down -- >> we will hold that thought. thank you very much. ♪
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guy: let's talk about the headlines this morning. china starts with a bang. manufacturing pmi surging. rising. stocks the death toll in iran rises as protesters clash with security forces. is volatility the risk for 2018. bitcoin starts 2018 with a slide for the first time since 2015. have we seen a short-term peak? welcome.ing and you are watching bloomberg markets, the european open. i'm guy johnson in london.
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shapinge how things are up. i want to take you to the grr screen and give you a sense of the sect or story. banks bed, the oil and gas sectors on the front foot. are a little bit of a laggard. we have seen copper trading down in asia. the data out of china has been pretty solid on the manufacturing front. autos are down, chemicals down, chemicals down by .8%. get the first word news. sebastian: the death toll in protests continued across the country and climbs. accounts vary from 20 people who may have died in the demonstration. that as security clashes with protesters of leaders. the president has defended the iranian people's right to demonstrate as he tries to diffuse the situation.
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penceice president mike will visit israel and egypt this month despite speculation he had delayed it again. the confirmation came after an israeli foreign ministry spokesman said the visit isn't included in the scheduled visits of dignitaries in january. this fuels suspicion he has postponed the second time. he had planned to meet with egypt's present and israel's prime minister, but the visit was postponed until this month. denmark's prime minister wants to conclude the government's planned tax reform this year targeting income tax cuts for workers with low and beat him sized wages. in a speech, he said the cuts will make it more feasible to work, which will bring more people to the job market and help ease the country's labor shortages. australia's prime minister has revived the debate about whether the country could become a republic after queen elizabeth dies. architect -- turnbull hinted at a survey that says the nation needs to have a open discussion about the issue. becoming a republic would
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require a referendum to make changes to the constitution. we will be joined by the former prime minister at 11:30 a.m. u.k. time. two coastal areas saw the biggest house price increases in the u.k., outstripping gains in london. in south england saw 13% rise, almost five times the national increase. writing on the south coast saw the next highest gain with prices rising more than 11%. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. s at 66.90.art been buoyed by production cuts and a standstill in u.s. drilling. we see what is happening with and trading oil
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is said to be an interesting story this year. let's get an idea of what to expect. we are joined on set, still with us. alex, let's talk about ranges. we are trading mid 60's at the moment. where is the current range. could we get more? the final trading day of last year, we closed above that for the first in a long time since 2015. there is potential to go higher. some technical analysts will look at the charts and say it can go higher. 80 seems a little far, but we see option traders snapping up bullish bets in the 80's and 100s. that is more to do with the geopolitical risk. you see it in iran and libya, saudi arabia, venezuela.
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dave, the momentum has been with us. i have the chart from brexit since june. we have been on arising story. what stops it? david: at the moment, i don't think we do. we continue on. lated the sideways phase summer last year, we broke out of that and it has been a steady move higher, which is accelerated by the dollar weakness. last month, we have been bullish quite a month. is the capt probably and the top of the range. there are fairly significant technicals in there and that fits with our house view on oils. the bigger trend is still sideways. 70 is the cap of that bigger range. where oil starts to change the story is if you breaking to or 70, because if you think back to the collapse of oil, you had the breakdown point around 86 on brent, where we fell and there was a vacuum.
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you've probably got a vacuum up to 86 and that is where it could get interesting if you broke those levels. guy: inflationary impact would feed into -- >> the reason you are seeing breakevens move up is this oil story at the moment, helping other sectors. tothat continues and starts increase bond yields rising, the broader impact in the economy will be interesting. if you look at the positioning data on oil, that it is as long as it has been. also to look at what the shale guys are doing in their forward positioning, hedging stuff going forward as the economic up from the point of view, they are rigged to become real cash drivers. are we -- david talked about the technical levels and the risk on the top side cap and things out,
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but what the reduction story will look like. what do we get from the u.s. if we see these rises? alex: one area we have seen hedging coming through is the positioning of the banks. your role the hedges through to the futures market and that has been surging through the end of last year. there are real signs, and the curve dips at the backs, shale produces hedging. 9e report last week showed billion barrels a day. the question is if demand can go up. shale can keep pumping if demand roars higher. 2018 could be as much a demand story as it is in opec and shale story. guy: how will politics feed into this? one of the big catalysts this year has been the alliance between opec and moscow. at the moment, it seems to favor both ends of that story. does that continue? we have a russian election coming up, putin looks likely to
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win, but a factor in the mix. alex: saudi arabia playing a part, as well. through the year, particularly following prices, what is the key price saudi arabia and russia want? when have they come far enough and now we will he's off the gas? oldoesn't look like the days. maybe they lift the foot, that remains to be seen. it will be one to watch, how quickly they took the foot off the gas with these cuts. one final question to you, dave. in the past, central banks have looked through this kind of inflation. the you think they would do that again this time around? david: that is a good question. i think central banks want higher inflation. so inclined toe ignore it as they have done before or look through it as they have done before, they will
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focus on inflation and be happy to get that anyway they can. guy: taking the number to 2% would make them happy. we will wrap that up. alex longley joining us on the , westory and david sneddon are not quite done with david yet. he will be joining us on bloomberg radio. digital. -- dab the conversation will continue. up next, key trends to watch in the pharmaceutical space in 2018. immunotherapy, oncology areas of focus. this is bloomberg. ♪
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♪ 42 minutes into the trading session this first day of 2018. happy new year. let's get a first word news update with sebastian salek. sebastian: in iran, the death toll continues across the country. accounts vary, as many as 20 may have died in the demonstration as security forces clashed with protesters rallying in displeasure with islamic republic leaders. president rouhani has defended the right to demonstrate as he tries to diffuse the situation. mike pence will visit israel and egypt this month, despite speculation he has delayed it again. the confirmation came after a foreign ministry spokesman in israel said he wasn't included
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in high-level visits, fueling speculation he had postponed again. egypt'sed to meet with president and the israeli prime minister in december, but the visit was postponed until this month. denmark's prime minister wants to conclude that planned tax reform this year targeting tax cuts for low and medium-sized wages. in his newest speech, he said at the tax cuts will make it more feasible to work, which will bring more people to the market and ease the labor shortage. malcolm turnbull has revived the debate about whether the country could become a republic after the queen dies. he hinted at a survey to gauge public opinion, saying the nation is to have an honest open discussion about the issue. becoming a republic would require a referendum to make changes to the constitution. we will be joined by the former australian minister at 11:30 a.m. u.k. time. an english bar town and two
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coastal areas saw the biggest housing increases in the u.k. last year, outstripping london. according to the bank's halifax division, -- a 13% jump in 2017, 5 times the national intrigue -- increase. brightens saw the next highest with prices rising more than 11%. news, powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. thank you. 2017, another active year in the pharmaceutical space, highlighted by diverging performance among drugmakers. what does 2018 bring? bloomberg intelligence senior pharmaceutical analyst joins us on set. happy new year. let's start off with science and then we will work our way through. what is going to be the science story going into 2018? going to see several
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large phase three trials. these are the largest trials were companies find out how well the drug worked in large populations, and that is requisite for regulatory approval. cancer companies in oncology today, this mode of treating cancer and trying to entice the immune system to attack the cancer, are going to report major trials. drugs them are combining for different combinations to see which one works best. -- has the most number of trials in 2018. it will be interesting, by the middle of the year we will have a strong view or knowledge about how these combinations are working and who is in the lead in terms of treating lung
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cancer, which is the biggest indication. intodoes this story feed that again? what are your expectations? sam: the one at most risk is merck. if you look at the share price of merck the last year, it had a big drop in the fourth quarter when the company -- all it did was delayed the reporting date of one of its key phase three trials. -- look at that, there is a we need merck u.s.. when you look at that, you will see a pretty strong drop in shares. we can see that on the white chart. guy: it is a bloomberg chart. that, theu look at white line dropping like a stone was simply them not failing to trial, saying they are delaying something. it shows the sensitivity of a company to developments of this
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particular drug. reporting the most news in 2018 is roche. anything competitive for merck creates risk for merck. for merck and bristol-myers, less dependent on the one drug because they have another drug that is a key driver, but merck is the most exposed if roche continues to deliver strong clinical trials in its lung cancer space. guy: other areas? give me a sense of m&a? what factors can we think about when it comes to the dollar. a lot of these pharmas reporting dollars. what can we expect in these factors? sam: let's talk about m&a first. roche closed the year with an m&a deal.
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we saw a few, not as many as thected, but roche ending last trading day of the year, announcing the acquisition of the u.s. biotech. nothing of russian size, but it got people excited again and we have the big health care conference that jpmorgan holds next week and everyone is deals, etc. you will continue to see cherub pharma among large small biotech's, but in terms of wholesale m&a, that will still end up being dependent on assets and specific needs of the pharma companies. science coming more in focus. sam: entirely. volatility is so much that two weeks later, what i write is irrelevant. whattrength of the euro is we need to keep an eye on. 1.22 ther is back at
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euro and it is one we need to think about when it comes to the euro reporting companies. it is important for the u.s. as they suffered from the strength of the dollar, now it has weakened and helped them. we saw that in q3 and i expected in q4 too. guy: we will look forward to that jpmorgan conference. senior pharmaceutical analyst sam fazeli, thank you. next, the euro in 2018. can we get used to an even stronger single currency? we go to berlin and get a take. that is next. this is bloomberg. ♪
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♪ 8:52 in london. we have had a whole range of data out this morning and the pmi, surveys, soft data, are generally below where we were anticipating they would be. we have had that out of the netherlands, spain, france, we are waiting for german numbers which could behind. these are all solid numbers, but it is a relative position coming into this year. can we continue with a strong data we are seeing at the moment? the pmi's.rom if we see a rollover, what will that do to sentiment?
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the hardest data will have momentum, but some of these surveys, it will be interesting to see them fade. it is being said it will be a struggle to get the data to move higher. what does that mean for 2018 for the euro? it is a new year, what should we be expecting? says it leads to a stronger euro against the dollar and the pound. rick jones, happy new year. he joins us from our mliv team. the mliv -- the data is strong out of europe and if we see what we saw in the manufacturing lines this morning, what can we expect in terms of the where -- where the euro gets the position? >> happy new year to you. be a year ofcould consolidation, which is to say, that that it will probably remain strong. i don't think we will match the gains we saw in 2017, but it will be the same for the euro.
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tacked onzero index 10% in 2017. i am not expecting a move of that magnitude higher for the euro, but conditions are favorable for the euro to push high, maybe not matching 2017 performance, but still a comfortable move forward into 2018. guy: how much higher? david sneddon joined us on set earlier on. his sense was around 122, it is tough to make gains from there. think probably a little more bullish than that, but nothing near 130 if you want to pick a round number out of the year -- hair. we look at the 120 2, 125 level. once you start getting to those levels, you get some pushback from the ecb, who are taking a slightly more hawkish level, but if we get see an upside in the euro, we could see pushback and the ecb.
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they have been relatively successful after the strong push higher, after macron was elected last year. i think it is a slow steady. nothing -- spectacular like this year, and we are probably looking at have to magnitude of the rise last year. guy: german manufacturing, the number 63.3 on my screen. that is exactly where we were last time and it certainly is where the consensus was in terms of the data coming into that. you can find that on your eco-screen, german data coming through. germany continues to be the real powerhouse behind this story. rich, the things i expect a lot of people will be asking in a few weeks, will be italian political scene upset what has been a reasonably good economic story? in 10 seconds, what do you see their? -- there? richard: we could get some
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surprises, but we don't have any existential risk to the euro. even the most skeptic parties won't push for that this time around. guy: let's just take a step back from all of this. to stronger data is going divide -- stronger euro is going to provide a reason for inflation not to come to target. draghi has but one job. what happens if inflation doesn't deliver this year? is the difficult situation the ecb has put itself in. if you talk to some of the more hawkish members of the ecb, given the underlying strength in the european economy, we are bound to get some sort of wage gains, which will push inflation in the right direction. what it does mean is once we get to the september-october. bang, the ecb has an important decision to make. it could be we get a further taper after that from the ecb and maybe not rate rises well
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into 2019. guy: great stuff. happy new year. int miller will be back berlin tomorrow after his little vacation. up next, it is "surveillance." i'm off to radio. ♪ is this a phone?
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see how much you can save. choose by the gig or unlimited. xfinity mobile. a new kind of network designed to save you money. call, visit, or go to xfinitymobile.com. francine: leading the way. chinese stocks set the pace. , as they and uprising president defends the people's right to demonstrate. bitcoin extended slide. north korea hacks cryptocurrencies. ♪ francine: welcome. happy new year. it's 2018. here are your markets. looking at a little bit of pressure.

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